Eligible employees saved £90.4bn into workplace pension pots in 2018


Eligible employees contributing to workplace pension pots saved a total of £90.4 billion in 2018, an increase of £7 billion on the amount saved over the previous year, according to research by the Department for Work and Pensions (DWP).

Its annual Workplace pension participation and savings trends of eligible employees official statistics: 2008 to 2018 report, published on 5 June 2019, also found that in 2018, pension contributions by employees accounted for 26% of their retirement savings, compared to 64% that was contributed by employers. The remaining 10% is attributed to income tax relief on employees’ contributions.

Overall, 87% of eligible employees participated in a workplace pension in 2018, an increase on the 84% saving into an occupational pension in 2017. Between 2012 and 2018, the number of private sector employees saving into a workplace pension has increased by 43%, and now stands at 85%. This compares to 93% of public sector staff who participate in their workplace pension.

The sector with the highest workplace pension participation in 2018 was the public administration, education and health industry (91%), while the lowest participation rates were seen in the construction industry (79%).

In the private sector, the largest increase in occupational pension participation between 2017 and 2018 was in the agriculture and fishing industry, where it rose from 68% to 78%. Meanwhile, 91% of those employed in a professional occupation saved into a workplace pension in 2018, versus 82% of those working in skilled trade occupations, such as plumbers, carpenters and welders.

In 2018, 95% of eligible employees in the public sector earning between £50,000 and £60,000 a year participated in their workplace pension, compared to 92% working in the private sector who are also in this earnings band.

Almost nine in 10 (88%) full-time employees saved into their occupational pension pots in 2018, in comparison to 82% of those who work on a part-time basis. The largest increases to pension participation in 2018 occurred in the 22 to 29 age range; in the public sector, 90% of staff participating in a workplace pension were in this age bracket, which is an increase of 11% since 2012. This is reflected in the private sector, where pension participation for those aged between 22 and 29 has risen from 24% in 2012 to 84% in 2018.

In 2018, 72% of eligible staff had saved into their workplace pension in at least three of the last four years; this is a decrease of 2% since 2017.

Steven Cameron, pensions director at Aegon, said: “This year’s figures show positive trends, particularly for small and micro employers, lower earners, those working part-time and those in younger age bands. This shows that auto-enrolment is making a real difference for these employees, all of whom have historically been at risk of not saving for retirement. The rise in participation for younger age bands is particularly encouraging, as it might be tempting for this group to prioritise other financial commitments over saving for retirement. For young [employees], it’s the contributions at the start of their career which can make the biggest difference as they have the longest to benefit from investment growth.”

Lesley Alexander, vice president at the Pensions Management Institute (PMI), added: “As encouraging as this news is, there is still much to be done if the public is to enjoy a secure retirement. The rise of the gig economy has seen a sharp increase in the number of people who are self-employed or who work part-time. We need to ensure that such individuals are brought into pension saving too. Moreover, while £90 billion in overall saving is an impressive figure, if individuals are saving at the statutory minimum of 8% of qualifying earnings, they will still not be saving enough each month to secure a comfortable retirement. We still need to encourage the public to save more. [While] we can be reassured by what has been achieved so far, there is still much that remains to be done.”